Business Overview

Mining Bitcoin and other cryptocurrencies is the Wild West of technology and finance. The field is still evolving and largely unregulated, and the work comes with risk. As with any frontier, however, there’s significant profit potential for those who succeed.

Although cryptocurrency mining involves the latest in computational and financial advancements, starting a mining business requires no technical knowledge. The work is basically a numbers game, and anyone who’s willing to invest in the resources needed to win the game might profit.

Who is this business right for?

The first people to mine Bitcoin were mostly technology geeks who were intrigued by the cryptocurrency’s innovation. Today, geeks continue to experiment with cryptocurrencies, but they aren’t the only people mining Bitcoin and other cryptocurrencies.

Anyone who wants a primary or side business that provides passive income may be interested in running a cryptocurrency mining business. The work involved can be arranged around other obligations, and the budget required can be adjusted as needed.

What happens during a typical day at a bitcoin mining business?

Running a Bitcoin mining business is mostly hands-off work. As long as operations are running smoothly, business owners need to do little more than check their business’ Bitcoin holdings and the current exchange rate to see if they want to sell.

The most common computer malfunction is overheating, and business owners do need to respond quickly when this happens. Computers that overheat shut down, and they won’t provide any profit until they’re cooled down and restarted.

What is the target market?

A Bitcoin mining business serves the Bitcoin cryptocurrency and therefore, the software used must comply with Bitcoin’s standards. Other cryptocurrency miners must comply with the standards of the cryptocurrency being mined.

How does a bitcoin mining business make money?

Mining Bitcoin is akin to participating in competitive auditing. Businesses verify Bitcoin transactions by guessing 64-digit hexadecimal numbers, which are referred to as “hashes.” The first business to guess a hash that’s equal to or less than the target hash is awarded Bitcoin and a transaction fee.

Bitcoin is set up so that the number of BItcoin rewarded halves over time. This occurs roughly every four years, and no more Bitcoin will be awarded once there’s a total of 21 million Bitcoin. As the reward for Bitcoin decreases, the amount earned from transaction fees is expected to increase.

(Other cryptocurrencies operate differently.)

What is the growth potential for a bitcoin mining business?

Bitcoin mining operations run the gamut from individuals doing this as a hobby to large corporations that have vast resources. An example of a small-scale setup is Geoffrey Welborn’s inexpensive, yet profitable, dorm room operation. A business in Sweden has a much larger operation, maintaining 45,000 computers in a former helicopter hangar.